IDEAS home Printed from https://ideas.repec.org/a/eee/worbus/v44y2009i3p250-261.html
   My bibliography  Save this article

Understanding offshoring: A research framework based on disintegration, location and externalization advantages

Author

Listed:
  • Kedia, Ben L.
  • Mukherjee, Debmalya

Abstract

We present an analytical framework explaining offshoring in this paper. We address the question: why do firms offshore their business functions? Given the growing prevalence of offshoring as a dominant business practice in the world of global business, this question merits further research attention. We propose that firms embark on offshoring when they perceive three sets of interrelated advantages: disintegration advantages (D), location-specific resourcing advantages (L) and externalization advantages (E). Theories from multiple disciplines form the foundation of Disintegration-Location-Externalization (DLE) framework. Implications for managers, government policy makers and recommendations for future research are explored.

Suggested Citation

  • Kedia, Ben L. & Mukherjee, Debmalya, 2009. "Understanding offshoring: A research framework based on disintegration, location and externalization advantages," Journal of World Business, Elsevier, vol. 44(3), pages 250-261, July.
    • Handle: RePEc:eee:worbus:v:44:y:2009:i:3:p:250-261
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1090951608000539
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peter J. Buckley & Donald R. Lessard, 2010. "Regaining the Edge for International Business Research," Palgrave Macmillan Books, in: Foreign Direct Investment, China and the World Economy, chapter 2, pages 7-13, Palgrave Macmillan.
    2. Bunyaratavej, Kraiwinee & Hahn, Eugene D. & Doh, Jonathan P., 2007. "International offshoring of services: A parity study," Journal of International Management, Elsevier, vol. 13(1), pages 7-21, March.
    3. Peter J Buckley & R D Pearce, 1979. "Overseas Production and Exporting by the World's Largest Enterprises: A Study in Sourcing Policy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 10(1), pages 9-20, March.
    4. Mol, Michael J. & Pauwels, Pieter & Matthyssens, Paul & Quintens, Lieven, 2004. "A technological contingency perspective on the depth and scope of international outsourcing," Journal of International Management, Elsevier, vol. 10(2), pages 287-305.
    5. Rajneesh Narula & John Dunning, 2000. "Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 141-167.
    6. Arie Lewin & Carine Peeters, 2006. "The top-line allure of off-shoring," ULB Institutional Repository 2013/9041, ULB -- Universite Libre de Bruxelles.
    7. Graf, Michael & Mudambi, Susan M., 2005. "The outsourcing of IT-enabled business processes: A conceptual model of the location decision," Journal of International Management, Elsevier, vol. 11(2), pages 253-268, June.
    8. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    9. Dunning, John H, 1979. "Explaining Changing Patterns of International Production: In Defence of the Eclectic Theory," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 269-295, November.
    10. John McLaren, 2000. ""Globalization" and Vertical Structure," American Economic Review, American Economic Association, vol. 90(5), pages 1239-1254, December.
    11. Peter J. Buckley & Mark Casson, 1991. "The Future of the Multinational Enterprise," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21204-0.
    12. Kedia, Ben L. & Lahiri, Somnath, 2007. "International outsourcing of services: A partnership model," Journal of International Management, Elsevier, vol. 13(1), pages 22-37, March.
    13. Brian Snowdon & George Stonehouse, 2006. "Competitiveness in a globalised world: Michael Porter on the microeconomic foundations of the competitiveness of nations, regions, and firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(2), pages 163-175, March.
    14. Lilach Nachum, 2000. "Economic Geography and the Location of TNCs: Financial and Professional Service FDI to the USA," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(3), pages 367-385, September.
    15. Alan M. Rugman & Alain Verbeke, 2005. "A Note on the Transnational Solution and the Transaction Cost Theory of Multinational Strategic Management," Chapters, in: Analysis of Multinational Strategic Management, chapter 2, pages 16-26, Edward Elgar Publishing.
    16. Nitish Singh & Sumit Kundu, 2002. "Explaining the Growth of E-Commerce Corporations (ECCs): An Extension and Application of the Eclectic Paradigm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(4), pages 679-697, December.
    17. Arie Y Lewin, 2005. "Letter from the Editor," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(3), pages 251-253, May.
    18. Arie Y Lewin, 2005. "Letter from the Editor," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(5), pages 489-491, September.
    19. Mol, Michael J. & van Tulder, Rob J.M. & Beije, Paul R., 2005. "Antecedents and performance consequences of international outsourcing," International Business Review, Elsevier, vol. 14(5), pages 599-617, October.
    20. Srinivasan Balakrishnan & Birger Wernerfelt, 1986. "Technical change, competition and vertical integration," Strategic Management Journal, Wiley Blackwell, vol. 7(4), pages 347-359, July.
    21. Stack, Martin & Downing, Ricard, 2005. "Another look at offshoring: Which jobs are at risk and why?," Business Horizons, Elsevier, vol. 48(6), pages 513-523.
    22. Candace Young-Ybarra & Margarethe Wiersema, 1999. "Strategic Flexibility in Information Technology Alliances: The Influence of Transaction Cost Economics and Social Exchange Theory," Organization Science, INFORMS, vol. 10(4), pages 439-459, August.
    23. Henk W Volberda, 2006. "Bridging IB theories, constructs and methods across cultures and social sciences," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(2), pages 280-284, March.
    24. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    25. Ben Kedia & Debmalya Mukherjee & Somnath Lahiri, 2006. "Indian business groups: Evolution and transformation," Asia Pacific Journal of Management, Springer, vol. 23(4), pages 559-577, December.
    26. Jonathan P. Doh, 2005. "Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice," Journal of Management Studies, Wiley Blackwell, vol. 42(3), pages 695-704, May.
    27. Luo, Yadong, 2007. "A coopetition perspective of global competition," Journal of World Business, Elsevier, vol. 42(2), pages 129-144, June.
    28. Arie Y Lewin, 2005. "Letter from the Editor," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 1-1, January.
    29. Wu, Fang & Cavusgil, S. Tamer, 2006. "Organizational learning, commitment, and joint value creation in interfirm relationships," Journal of Business Research, Elsevier, vol. 59(1), pages 81-89, January.
    30. Jay B. Barney & Mark H. Hansen, 1994. "Trustworthiness as a Source of Competitive Advantage," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 175-190, December.
    31. Peter J Buckley & Timothy M Devinney & Jordan J Louviere, 2007. "Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(7), pages 1069-1094, December.
    32. Bunyaratavej, Kraiwinee & Hahn, Eugene D. & Doh, Jonathan P., 2008. "Multinational investment and host country development: Location efficiencies for services offshoring," Journal of World Business, Elsevier, vol. 43(2), pages 227-242, March.
    33. Andrew Delios & Paul W. Beamish, 1999. "Ownership strategy of Japanese firms: transactional, institutional, and experience influences," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 915-933, October.
    34. Arie Y Lewin, 2005. "Letter from the Editor," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(4), pages 355-356, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Clampit, Jack & Kedia, Ben & Fabian, Frances & Gaffney, Nolan, 2015. "Offshoring satisfaction: The role of partnership credibility and cultural complementarity," Journal of World Business, Elsevier, vol. 50(1), pages 79-93.
    2. Bunyaratavej, Kraiwinee & Hahn, Eugene D. & Doh, Jonathan P., 2008. "Multinational investment and host country development: Location efficiencies for services offshoring," Journal of World Business, Elsevier, vol. 43(2), pages 227-242, March.
    3. Martinez-Noya, Andrea & Garcia-Canal, Esteban & Guillen, Mauro F., 2012. "International R&D service outsourcing by technology-intensive firms: Whether and where?," Journal of International Management, Elsevier, vol. 18(1), pages 18-37.
    4. Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, vol. 19(4), pages 390-406.
    5. Hätönen, Jussi & Eriksson, Taina, 2009. "30+Â years of research and practice of outsourcing - Exploring the past and anticipating the future," Journal of International Management, Elsevier, vol. 15(2), pages 142-155, June.
    6. Bunyaratavej, Kraiwinee & Hahn, Eugene D. & Doh, Jonathan P., 2007. "International offshoring of services: A parity study," Journal of International Management, Elsevier, vol. 13(1), pages 7-21, March.
    7. Jensen, Peter D. Ørberg, 2012. "A passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services," Journal of World Business, Elsevier, vol. 47(2), pages 311-326.
    8. Caniato, Federico & Elia, Stefano & Luzzini, Davide & Piscitello, Lucia & Ronchi, Stefano, 2015. "Location drivers, governance model and performance in service offshoring," International Journal of Production Economics, Elsevier, vol. 163(C), pages 189-199.
    9. Kedia, Ben L. & Lahiri, Somnath, 2007. "International outsourcing of services: A partnership model," Journal of International Management, Elsevier, vol. 13(1), pages 22-37, March.
    10. Niccolò Pisani & Joan Enric Ricart, 2016. "Offshoring of Services: A Review of the Literature and Organizing Framework," Management International Review, Springer, vol. 56(3), pages 385-424, June.
    11. Valle, Sandra & García, Francisco & Avella, Lucía, 2015. "Offshoring Intermediate Manufacturing: Boost or Hindrance to Firm Innovation?," Journal of International Management, Elsevier, vol. 21(2), pages 117-134.
    12. Martinez-Noya, Andrea & Narula, Rajneesh, 2018. "What more can we learn from R&D alliances? : A review and research agenda," MERIT Working Papers 2018-022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Hätönen, Jussi, 2009. "Making the locational choice: A case approach to the development of a theory of offshore outsourcing and internationalization," Journal of International Management, Elsevier, vol. 15(1), pages 61-76, March.
    14. Lewin, Arie Y. & Volberda, Henk W., 2011. "Co-evolution of global sourcing: The need to understand the underlying mechanisms of firm-decisions to offshore," International Business Review, Elsevier, vol. 20(3), pages 241-251, June.
    15. Gooris, Julien & Peeters, Carine, 2014. "Home–Host Country Distance in Offshore Governance Choices," Journal of International Management, Elsevier, vol. 20(1), pages 73-86.
    16. Lahiri, Somnath & Kedia, Ben L., 2011. "Co-evolution of institutional and organizational factors in explaining offshore outsourcing," International Business Review, Elsevier, vol. 20(3), pages 252-263, June.
    17. Mukherjee, Debmalya & Lahiri, Somnath & Ash, Steven R. & Gaur, Ajai S., 2019. "Search motives, local embeddedness, and knowledge outcomes in offshoring," Journal of Business Research, Elsevier, vol. 103(C), pages 365-375.
    18. Julien Gooris & Carine Peeters, 2012. "Home-Host Country Distance and Governance Choices in Service Offshoring," Working Papers ECARES ECARES 2012-007, ULB -- Universite Libre de Bruxelles.
    19. Arie Lewin & Carine Peeters, 2006. "Offshoring administrative and technical work: business hype or the onset of fundamental strategic and organizational transformation ?," ULB Institutional Repository 2013/9039, ULB -- Universite Libre de Bruxelles.
    20. McIvor, Ronan & Bals, Lydia, 2021. "A multi-theory framework for understanding the reshoring decision," International Business Review, Elsevier, vol. 30(6).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:worbus:v:44:y:2009:i:3:p:250-261. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/620401/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.